The costs of educational technology are of increasing interest to academics, government, international agencies, and development agencies. The relatively new discipline of the economics
of education, initiated in the United Kingdom by Vaizey (1958) and in the United States by
Schultz (1961), focused on attempts to quantify the economic benefits of, and the efficiency
of public expenditure on, education. In parallel, the application of technology to education
came to be seen as a way of lowering the costs of education (Jamison, Suppes, & Wells, 1974,
p. 57). The use of technology would, it was argued, change the production function, offering
what Wagner (1982, p. ix) later described as “a mass production alternative to the traditional
craft approach. ” The scene was therefore set for academic economists to take an interest the
in possible impact of technology on educational costs.

COSTING DISTANCE EDUCATION

Broadly one can identify four generations of distance education systems:

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correspondence systems (referred to below as Class I systems),

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educational broadcasting systems (Class II systems),

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multimedia distance education systems (Class III systems), and

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online distance education systems (Class IV systems).

These distinctions are not, of course, as clear-cut in practice as typologies of distance
education make them appear. Nevertheless, they offer a useful framework within which to
consider the costs of distance education in its various “ideal” forms.

It was the development of capital-intensive, big-budget Class II and III systems that forced
governments and aid agencies to ask how much these systems would cost, at the same time

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